A country has been in existence for only two years. In the first year, tax revenues were $1.0 million and outlays were $1.5 million. In the second year, tax revenues were $1.5 million and outlays were $2.0 million. At the end of the second year, the total government debt was ________.
A) $0.5 million
B) $1 million
C) $2.5 million
D) $3.5 million

Question

Quizplus · Accepted Answer

The total government debt can be calculated as the sum of the deficits from each year.

In the first year, the deficit was $1.5 million - $1.0 million = $0.5 million.

In the second year, the deficit was $2.0 million - $1.5 million = $0.5 million.

Therefore, the total government debt at the end of the second year was $0.5 million + $0.5 million = $1 million (Option B).

A Country Has Been in Existence for Only Two Years